Microsoft is developing a strategy by shifting its production outside of China.

Microsoft Is Shifting Its Production Outside of China

Microsoft (**MSFT**) plans to reshape its production structure and move a significant portion of new product manufacturing outside of China by 2025. According to a report by Nikkei Asia, the tech giant is following in the footsteps of other American technology firms and expanding its production network on a global scale.

Change in Production Strategy

Among Microsoft’s goals is to shift the production of components and assembly for Surface laptops and data center servers predominantly outside of China. Currently, Microsoft already directs a significant portion of its server production to other countries and aims to source a large part of its server materials (80%) from abroad.

Increasing Competition and Supply Chain Dynamics

Chinese tech companies have become major players in global server supply chains with their advanced technological capabilities and competitive pricing. However, rising tensions between the U.S. and China are prompting many tech companies to diversify this setup. In this context, Microsoft is trying to reduce its dependence on China and has ended its partnership with Wicresoft as of April, making decisions that will affect thousands of jobs.

Impact of Geopolitical Tensions

The geopolitical tensions between the U.S. and China are leading companies to rethink their production strategies. China has imposed customs restrictions on Nvidia’s (**NVDA**) artificial intelligence chips, while former U.S. President Donald Trump brought attention to export restrictions on rare earth elements. Furthermore, increasing tensions in the Taiwan Strait are causing U.S.-based firms to seek new production alternatives.

As a result, large technology companies like Microsoft are striving to adapt to rapidly changing market conditions through efforts to restructure their global production networks.